Times interest earned

Times interest earned
Times interest earned is a ratio which measures the amount of times interest payments can be covered by income before taxes. Interest payments are paid before taxes which is why income before taxes is used in this ratio.

Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honor its debt payments. It may be calculated as either EBIT or EBITDA divided by the total interest payable.

Times Interest Earned
Times Interest Earned is also known as "Interest Coverage" ratio. Look up pretax earnings, and add back interest expense- this gives earnings before interest and taxes (EBIT).

Times Interest Earned
Quick Definition
Examines a company's ability to pay the interest on its debt.

Times Interest Earned - TIE
A metric used to measure a company's ability to meet its debt obligations.

Times Interest Earned
We discuss several different measures of leverage in our article on Understanding Financial Ratios.

Times Interest Earned -
A ratio that attempts to measure the extent to which earnings may decline before impairing a firm's ability to meet its interest costs. A financially stronger firm should have a higher ratio than a weaker firm should.

Also known as Times Interest Earned, the Interest Coverage ratio is a measure of a company's ability to pay its debt. Divide PBIT by Interest Expense, and you will know how many times the company could have paid the interest expense on its debt.

Interest Coverage Ratio (Times Interest Earned)
Indicates a company's capacity to meet interest payments. Uses EBIT (Earnings Before Interest and Taxes)
Formula
EBIT
Interest Expense ...

A value above 3 times is considered safe.Note: Interest cover is also called "interest coverage" and "times interest earned".
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The best known examples of gearing ratios include the debt-to-equity ratio (total debt / total equity), times interest earned (EBIT / total interest), equity ratio (equity / assets), and debt ratio (total debt / total assets).

times interest earned This is a measure of the creditworthiness of a company. It is equal to Earnings... timing the market Attempting to predict future market directions by examining recent price and...

See also: Interest, Debt, Ratio, Stock, Asset